Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Ross Stores' second quarter of fiscal 2026 was characterized by accelerating comparable store sales and a significant one-time tariff recovery that widened profitability. Management attributed the 10% comparable store sales increase to roughly 7% higher traffic and a 3% larger basket, while IEEPA tariff refunds cut cost of goods sold as a percentage of sales. Gross margin improved sharply, but SG&A grew faster than sales, and higher freight and buying costs partially offset the leverage. The sustainability of the margin expansion depends on underlying merchandise margin and cost trends after the one-time refund rolls off.
Revenue
$6.26B
+13.31% YoY
EPS (Diluted)
$2.66
+70.51% YoY
Operating Income
$1.1B
+72.91% YoY
Source: SEC XBRL
Ross Stores (ROST) reported Q2 FY2026 revenue of $6.26B, up 13.3% year over year. Operating margin was 17.6%, up 6.1 points from 11.5% a year earlier. ROST's fiscal Q2 FY2026 corresponds to calendar Q3 2026.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Sep 2026 | 2.06 | 1.98 | Beat +4.1% |
| Jun 2026 | 2.02 | 1.76 | Beat +14.5% |
| Mar 2026 | 2.00 | 1.94 | Beat +3.0% |
| Dec 2025 | 1.58 | 1.44 | Beat +10.1% |
Compiled by AI from 10-Q Item 2 of this filing
Operating income for Q2 FY2026 included about $253 million related to refunds of IEEPA tariffs paid, contributing to the 610 basis point increase in operating margin; cost of goods sold as a percentage of sales fell roughly 625 basis points, with a 405 basis point benefit from the recovery.
Source: 10-Q Item 2 MD&A
Comparable store sales increased 10% in Q2 FY2026, with management attributing the rise to an approximate 7% increase in traffic and 3% increase in basket.
Source: 10-Q Item 2 MD&A
After opening 47 stores in Q2 FY2026 consisting of 35 Ross and 12 dd's DISCOUNTS locations, the company increased its fiscal 2026 store opening plan to approximately 115 new stores, including about 90 Ross and 25 dd's DISCOUNTS stores.
Source: 10-Q Item 2 MD&A
Cost of goods sold as a percentage of sales decreased by about 625 basis points, driven by a 110 basis point improvement in merchandise margin, 100 basis points lower distribution costs, and occupancy leverage, partially offset by higher freight and buying costs.
Source: 10-Q Item 2 MD&A
SG&A grew 14.3% to $1,016 million and rose 15 basis points as a percentage of sales, primarily due to higher incentive compensation and store-related costs.
Source: 10-Q Item 2 MD&A
Compiled by AI from this SEC filing · 0 high, 4 medium, 1 low
The much faster growth in operating income relative to revenue suggests the quarter benefited from non-recurring items. If those benefits do not recur, future earnings growth could moderate toward underlying operational trends.
Source: 10-Q Income Statement (XBRL)
Revenue growth is heavily dependent on comparable store sales performance. A pullback in discretionary spending could reduce traffic and average transaction value, slowing sales growth and pressuring margins.
Source: 10-Q Income Statement (XBRL)
Gross margin improved to about 33.8% from 27.6% a year earlier, supported by cost of revenue growing only 3.6% while sales grew 13.3%. This relationship may not be sustainable if merchandise or freight costs rise faster than sales.
Source: 10-Q Income Statement (XBRL)
Although the current ratio of 1.61 indicates adequate short-term liquidity, the business relies on short-term trade credit for inventory. A disruption in trade credit or a buildup in inventory could pressure operating cash flow.
Source: 10-Q Balance Sheet (XBRL)
Year-to-date financing cash outflows totaled about $1.56 billion, including share repurchases and dividends. Remaining long-term debt of about $1.02 billion includes a portion due within current liabilities, potentially limiting flexibility if cash flow weakens.
Source: 10-Q Cash Flow Statement (XBRL)
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 6.26 $B | 5.53 $B | +13.31% |
Cost of Revenue $B | 4.15 $B | 4.00 $B | +3.57% |
Operating Income $B | 1.10 $B | 0.64 $B | +72.91% |
Net Income $M | 851.30 $M | 508.00 $M | +67.58% |
EPS (Basic) $ | 2.68 $ | 1.57 $ | +70.70% |
EPS (Diluted) $ | 2.66 $ | 1.56 $ | +70.51% |
SG&A Expense $B | 1.02 $B | 0.89 $B | +14.33% |
Answers draw on this SEC filing and the data on this page
Ross Stores delivered strong Q1 FY2026 growth, with revenue up 20.6% to $6.0B, diluted EPS up 37.4% to $2.02, and operating margin expanding to 13.4%, driven primarily by 17% comparable-store sales growth and lower cost of goods sold as a percentage of sales. Source: 10-Q Item 2 MD&A, pp.18-20.
Ross Stores delivered solid FY2025 results with revenue growing 7.7% to $22.75B and operating cash flow surging 28.4% to $3.03B, though operating margin compressed slightly to 11.9% as SG&A costs rose faster than revenue.
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